EU Referendum


Eurocrash: drawing a line in the sand


19/08/2012



Greece 394-jqc.jpg

Taking the lead in Der Spiegel today, and repeated elsewhere, is the news that German finance minister Schäuble and CDU/CSU party chief Volker Kauder are drawing a line in the sand with Greece.

The proximate cause is that funding gap in the Greek budget, already identified by the troika as €11.5 billion, has now been re-evaluated as €14 billion. The Schäuble-Kauder duo, therefore, are saying "enough".

Kauder, in particular, opposes any further payments or concessions, and both senior politicians are adamant that there should be no third bailout. "The Greeks have to keep what they have promised," Kauder says: "There is no more room [for manoeuvre]".

Kauder also picks up on the Issing theme, reflecting how influential this former ECB member is. He warns against changing the constitution in the midst of a crisis, and adds: "I want no United States of Europe".

Nevertheless, he calls for an independent authority to monitor whether national budgets complied with EU stability rules. This task could be done by "a special division of the ECJ or the European Court of Auditors".

The great europhile Schäuble, on the other hand, is focusing on the Greek debt. There are limits, he says, and the German government could not justify, "throwing money into a bottomless pit."

Schäuble is also critical of the debate on the "disintegrating eurozone". Defending his stance, he says, "If the euro does not stay together, we pay the highest price".

This is mirrored by eurogroup president, Jean-Claude Juncker. Predictably, he rejects what he calls "mind games". A Greek exit will not happen unless Greece "totally refuses" to fulfil any of its reform targets, he says.

In damage limitation mode, German EU Commissioner Günther Oettinger then warns of "unpredictable consequences" of a Greek exit from the euro. "If we can not keep a country with three percent of Europe's total debt in the eurozone, then we nowhere when it comes to solving the great problems of trust", he tells the Frankfurter Allgemeine Zeitung.

Oettinger also criticised statements made the Bavarian finance minister Markus Söder, who had demanded the exclusion of Greece. "We ought to keep Greece on board if at all possible", he says. The language being used about the EU and Greece is "absolutely inappropriate".

Austrian foreign minister Michael Spindelegger, however, reveals that he has, with his counterparts, discussed an amendment to the EU Treaty which will allow exclusion of euro-sinners.

As one might expect, Luxembourg's foreign minister, Jean Asselborn dismisses this as "completely the wrong direction". He says the EU "spirit" is to promote the integration, not division. Playing with eviction scenarios throws the whole existence of the EU into question.

The fact that this is even being discussed, though, tells is a great deal. The cracks are yawning into a chasm, and even the "colleagues" can't hide them.